July 1, 2005

That's from Representative Maxine Waters -- about eminent domain. She's speaking on the subject as Congress considers ways to put a clamp on local government power -- recognized by the Supreme Court -- to take private property to use for economic development. The linked article, in the Washington Times, repeatedly calls this a "new" power and states the holding of the case laughably badly:

Last week's Supreme Court decision in Kelo v. City of New London created new eminent domain powers to allow local governments to take private property from its lawful owner and give it to a private developer who promises to generate greater tax revenue with the land.

The new powers of eminent domain -- long reserved for taking property only for public use such as highways -- could be used to build developments such as privately owned strip malls or motels.

I guess we have the actual case and the myth of the case. Congressional rhetoric predictably uses the mythic version. Tom DeLay spouts:

"The Supreme Court voted last week to undo private property rights and to empower governments to kick people out of their homes and give them to someone else because they feel like it," said House Majority Leader Tom DeLay, Texas Republican. "No court that denies property rights will long respect and recognize other basic human rights.

Could people try to remember what the Court actually did in the Kelo case? It rejected a bright-line rule that would have said economic development never counts as part of the public use for which property can be taken. Horrible exercises of eminent domain of the sort DeLay refers to here were left to be decided in particular cases when they actually arise. Justice Stevens wrote:

It is ... argued that without a bright-line rule nothing would stop a city from transferring citizen A’s property to citizen B for the sole reason that citizen B will put the property to a more productive use and thus pay more taxes. Such a one-to-one transfer of property, executed outside the confines of an integrated development plan, is not presented in this case. While such an unusual exercise of government power would certainly raise a suspicion that a private purpose was afoot, the hypothetical cases posited by petitioners can be confronted if and when they arise. They do not warrant the crafting of an artificial restriction on the concept of public use

If Congress is so outraged about the abuse of power, why isn't it outraged by its own behavior when it wields the great legislative power of the federal government without bothering even to try to accurately describe the problem it means to address?

The House measure, which passed 231 to 189, would deny federal funds to any city or state project that used eminent domain to force people to sell their property to make way for a profit-making project such as a hotel or mall....

The measure, an amendment to an appropriations bill, would apply to funds administered by the departments of Transportation, Treasury, and Housing and Urban Development. House Majority Leader Tom DeLay (R-Tex.) and Majority Whip Roy Blunt (R-Mo.) said they will push for a more inclusive measure that would apply to all federal funds.

A fact sheet said under the bill the locality or state would "lose any federal funds that would contribute in any way to the project the property would be taken for."

No, no hypocrisy here is there? Did they pause anywhere in all of this and ask whether they had the power to do this? How is this not a flagrant violation of Congress's spending power? Why not condition all federal spending on state concession of whatever autonomy the states happen to have left?!

37 comments:

Well, the proof is in the pudding, isn't it? Supporters of Kelo think it set a baseline, that anything worse than that would be rejected by a court. In the scant days since the decision was announced, we've seen plans to take property to build a Lowe's store and strip mall, a city reversing an initial rejection to use ED after large campaign contributions from developers, and a city official praising leveling a trailer park as the highest and best use of eminent domain. If Kelo supporters are right, legal challenges to these takings should be successful. If critics are right (and I think they are), courts will conclude that public use is anything the local government says it is - after all, each of these projects will create jobs and increase tax revenue.

Did they pause anywhere in all of this and ask whether they had the power to do this? How is this not a flagrant violation of Congress's spending power?

I imagine that they think that they're quite safe, since it's limited to only preventing federal funds from being used for such a project, not removing all federal funds from a state that doesn't agree. Does anyone have a good handle on exactly how often federal funds are used for these sorts of things?

Also, there's quite a lot of precedent that's been upheld, precedent with much more tenuous relationships to spending power. The famous "states must raise their drinking age to get federal highway funds" issue, for example. And, until the Republican Congress repealed it, the uniform speed limit.

Ann: You know the legal help to the property owners won't be free and it won't be high quality. The homeowner also won't usually have years to wait out the mega-developers and city's ability to drag things out.

This will be decided when Souter's house is seized and sold to the developer who filed for it.

Worse, now Congress has been caused to try and pass some mess of legislation to "fix" what the Court has wrought.

No surprise that a lawyer wouldn't want a bright line rule... so that people who are faced with eminment domain seizures would have to hire one simply to protect their property. This is viewed by many cities as a green light to start seizing... and they are, in at least two areas in Milwaukee now. They were just waiting to see what happened here.

I say draw a big ole honking (would have used the f word... but this isn't my blog) bold wide line that thou shalt not cross.

Charles: My point is that the ideological interest groups should perceive these as important cases and fight to limit Kelo. They should offer representation. Why wouldn't they?

John: One of the requirements of the conditional spending doctrine is that the condition be clear, so if there's no "good handle" on what funds are involved, you've got a constitutional problem on that ground alone. And as far as the case you refer to, South Dakota v. Dole, it was poorly litigated, with the state failing even to argue that the relationship between the condition and the purpose of the spending was too attenuated. Only O'Connor dissented, back in the days before the Court really started to focus on federalism. There are plenty of people who think the conditional spending power doctrine should be limited, and lots of great scholarly writing on the subject. People who care about federalism should pay attention to this. Citing Dole just doesn't cut it as an answer.

Nick: You've got to take into account how much that rule would empower the homeowner to obstruct legitimate development and how much this will cost city taxpayers who want the development. I really think people are not looking at the whole picture here.

"You've got to take into account how much that rule would empower the homeowner to obstruct legitimate development and how much this will cost city taxpayers who want the development. I really think people are not looking at the whole picture here."

That observation seems to assume that there's been a market failure, that the economic development can't happen without government intervention. Why should that be so, if the development proposal is financially sound? Given that a private developer ends up with the property, why are any tax dollars involved in acquisition at all?

The current rush of ED projects is dismaying, and would seem to vindicate the Kelo critics.

Maxine Waters and Tom Delay agree on something? Get the ice skates, hell has frozen over.

Is the Congressional distortion of the Kelo holding really any worse than their usual distortions? Seems about par for the course to me.

Jim: Why can't it happen with free negotiation? Let's say the city wants to do an important lakeshore project or something big that requires a city block. Some individual owners would sell and others would see the potential to be the last holdout in the hope of getting an extortionate price. The existing owners -- who aren't all going to be little old lady homeowners, of course -- will behave in their self-interest and will be greedy. What's to stop them? I'd be greedy too in that situation.

I was asking if anyone commenting here had an idea of how much federal funding was used in such projects. I was not suggesting that it's impossible to tell whether federal funding was used or not. Personally, I believe that the condition is clear. I just would like someone to state how much, if any, impact this is likely to have. I suspect not all that much, but no news article seems to carry the information.

You've got to take into account how much that rule would empower the homeowner to obstruct legitimate development and how much this will cost city taxpayers who want the development. I really think people are not looking at the whole picture here.

Yes, Japan is so underdeveloped as a result of not having eminent domain. Seriously, I understand the holdout issue, but it's a balancing of rights. Homeowners often subjectively value their own home (because they're already living there, among other reasons) at far more than market value. Unfortunately, that subjective value is hard to quantify any way other than what price that the homeowner would accept. For that reason, when eminent domain is used, that subjective value can not be estimated. Thus, often the homeowner will be taking an absolute loss in personal utility and value, even as the community benefits.

It's not like the speed limit or drinking age law is the only similar law. What about all the laws (reporting, nondiscrimination, etc.) that the Federal Government places on colleges and universities-- not just those that directly take Federal monies, but even if they accept any student which has financial aid with a federal source?

Somehow I doubt that "I know it when I see it" is really going to provide a good basis. Does anyone really believe that the Supreme Court is going to be able to rule on every possible development? What sort of rule is it going to make? Apparently, according to the section of the opinion you quoted, whether something is "outside the confines of an integrated development plan" could be the bright line rule. I can't see how to make that responsibly stick. The requirement that the condition be clear should apply to the Supreme Court as much as to the spending doctrine.

Q Later this morning, many Members of the House Republican leadership, along with John Cornyn from the Senate, are holding a news conference on eminent domain, the decision of the Supreme Court the other day, and they are going to offer legislation that would restrict it, prohibiting federal funds from being used in such a manner.

Two questions: What was your reaction to the Supreme Court decision on this topic, and what do you think about legislation to, in the minds of opponents at least, remedy or changing it?

Ms. Pelosi. As a Member of Congress, and actually all of us and anyone who holds a public office in our country, we take an oath of office to uphold the Constitution of the United States. Very central to that in that Constitution is the separation of powers. I believe that whatever you think about a particular decision of the Supreme Court, and I certainly have been in disagreement with them on many occasions, it is not appropriate for the Congress to say we're going to withhold funds for the Court because we don't like a decision.

Q Not on the Court, withhold funds from the eminent domain purchases that wouldn't involve public use. I apologize if I framed the question poorly. It wouldn't be withholding federal funds from the Court, but withhold Federal funds from eminent domain type purchases that are not just involved in public good.

Ms. Pelosi. Again, without focusing on the actual decision, just to say that when you withhold funds from enforcing a decision of the Supreme Court you are, in fact, nullifying a decision of the Supreme Court. This is in violation of the respect for separation of church -- powers in our Constitution, church and state as well. Sometimes the Republicans have a problem with that as well. But forgive my digression.

So the answer to your question is, I would oppose any legislation that says we would withhold funds for the enforcement of any decision of the Supreme Court no matter how opposed I am to that decision. And I'm not saying that I'm opposed to this decision, I'm just saying in general.

Q Could you talk about this decision? What you think of it?

Ms. Pelosi. It is a decision of the Supreme Court. If Congress wants to change it, it will require legislation of a level of a constitutional amendment. So this is almost as if God has spoken. It's an elementary discussion now. They have made the decision.

Q Do you think it is appropriate for municipalities to be able to use eminent domain to take land for economic development?

Ms. Pelosi. The Supreme Court has decided, knowing the particulars of this case, that that was appropriate, and so I would support that.

http://releases.usnewswire.com/GetRelease.asp?id=49773

So once the God or the Supreme Court (Nancy seems to have trouble distinguishing between the two), then congress should in no way ever do anything that might diminish the impact of that decision. Or to look at it another way, in the seperation of powers, the supreme court should be viewed as above the executive or congressional branch and those branches should never act to diminish what the supreme court (or God, again I'm not sure where Nancy is standing on that question) has wrought.So congress and the executive branch were very wrong in doing anything to overturn the Dred Scott case, including the unpleasentness of the 1860s.

Professor Althouse,you wrote,The existing owners -- who aren't all going to be little old lady homeowners, of course -- will behave in their self-interest and will be greedy. What's to stop them? I'd be greedy too in that situation.

Those alarmed by Kelo fear that once you allow local politicans to reward their largest contributor base, real estate developers, with cheap land seized from others that the developer/politican group will be the ones behaving in their self-interest and will be greedy. What's to stop them? I'd be greedy too in that situation. Private greed we can live with, public corruption we cannot.

As several commentators elsewhere have mentioned, while this decision is entirely predictable for precdents, the precedents have taken us on a long slippery slope away from the original conception of public use. When people step back from the chain of precedents, it looks like we've traveled far from the original meaning, even though each was a tiny step from the original.

(I agree with Professor Volokh that the slippery slope is a valid argument when talking about legal judgments, due to the heavy reliance on precedent.)

What's interesting to me, yetanotherjohn, is the way so many bloggers are nattering about Pelosi garbling her position and saying "God" instead of the hastily voted on bill and the way federalism concerns have utterly flown out the window now that a right conservatives care about has been narrowed!

You say "it's a balancing of rights" but then you go on to argue for absolute rights and to decry the whole notion of balancing.

No, I don't. Arguing for an absolute right, in my opinion, would be arguing for the Japanese law where there is no eminent domain. I accept that eminent domain for public use is a necessary thing, even though it infringes upon property rights. I merely want to draw a line in order to balance that right. In my opinion, allowing eminent domain for economic development in the absence of blight only benefits the public in a small number of cases and by a small amount, while hurting homeowners in many cases and resulting in transfers from person A to person B. (Like the New York Times's sweetheart lease with an option to buy deal for their new headquarters off of eminent domain obtained land-- a deal they got after threatening to move to NJ.)

Limiting it to blight only balances the rights more appropriately by allowing it to be used in the cases where the public benefit is demonstrably very high.

I am unwilling to believe that the lack of a clear condition will really cause things to be evaluated each on the merits in a fair way. "I know it when I see it" is simply not a judicial rule that avoids abuse. Public benefit is also obtained from clear rules that prevent endless litigation over every proposed eminent domain action. Certainly forcing lots of expensive court cases with "high quality legal representation" is a drag on society as well. I'd argue that, in total, the public cost of all those trials would exceed the public benefit of the extra eminent domain actions.

The way federalism concerns have utterly flown out the window now that a right conservatives care about has been narrowed!

The federal government even paying for these things in the first place was already a betrayal of federalism concerns. I find it difficult to get overly concerned by something that reduces the use of them. In this particular case, rather than causing a relatively unrelated change of policy, depriving this money only reduces the number of eminent domain actions, or the number that use federal money.

It merely spells out the type of projects which are eligible for federal money. I have to think that that's uncontroversial. Congress could just as easily restrict these sources of money to only publically owned developments-- would anyone loudly complain? Congress limits federal money to colleges and universities to only go to schools which don't racially discriminate. I hardly see how it's a problem to limit federal money to development to only development that didn't violate someone's civil rights.

ps- I think my earlier post left my position unclear. As it happens, I was just down in my buddy's cube (he's as far to the left as I am to the right) and we were discussing Kelo.

Both he and I dislike the ruling, unlike you, Ann.

He wants a Constitutional amendment.

I think-- I didn't like the ruling, but the proper remedy is for Connecticut's people to decide how they want their laws to be. He thinks the newly proposed legislation goes to far, and I think it is fine-- the feds do have the right to put strings on federal money. I don't always like the strings, but that is within their authority, and I like the fact that strings tend to make localities less eager to accept or demand federal funds. More dampers on that desire is a good thing, not a bad one.

So while I understand your argument that conservative support for legislation limiting this type of seizure is somehow inconsistent, I disagree. Can you find the inconsistency or hypocrisy in my position?

Gerry: Yes, the left and right extremes are unhappy. Moderates like me understand why the Court did what it did. Don't assume I favor the profligate use of eminent domain or judicial rubber stamping of political choice. I don't. Neither did the Court. What I'm holding out against is the hysteria aimed at something the Court never even said.

You see Ann... this is where we greatly differ. I believe that as the owner of the property, they have a right to hold out and extort for more. That is how free markets work. Land has an arbitrary value not just based on what is phsyically built there, but also on whether someone wants it. If someone really wants that land, then the price goes up.

Kelo allows developers to bypass that process and pay what they think is "fair", not what the market could bear (bare? Whatever).

Why does that new lakeshore development have to be built at all? The city is creating an artifical need for it which forces the taking. The developer is saying if you don't take the land, I'll go to a bordering city to build there. In a true free market that should be allowed to happen, which would be a regulating factor on the price.

So in short... what's wrong with a home owner making a lot of money by holding out? Why is that evil? It's their property to sell at the price they choose. If it scares away a developer, then the home owner lost just as much.

Here's another nice discussion of why there are solid economic reasons to use the public use bright line. Holdout is an issue, but so is the impossibility of measuring subjective value without the owner having the right to refuse sale. Some sort of real public use (or blight) standard is necessary to strike the proper balance so that eminent domain is used where the public benefit is high enough, but not where it is so low that, though there is public benefit, the private harm to the owner exceeds it significantly.

Ann,So lets argue this on a federalist level. I invite you out to dinner. You pick a topless bar that happens to have a buffet. I decline to accompany you (Cornyn's restriction on federal use of eminent domain to take property from one private citizen and give to another private citizen). I also decline to pay for the dinner (Cornyn's restriction on use of federal funds to pay for states taking of private property to give to another private citizen). You still have the right to enjoy your dinner at the topless bar. I may not think it is right and may think less of you for doing that, but I am not stopping you. Your rights have no been diminished, I am just exercising my rights not to fund what I think is a poor idea.

Now if you want to go the next step and talk about where the money to pay for dinner is coming from in the first place (e.g. Taxes) and the idea of transfering money from the state (or at least the citizens of a state) to the federal government and then back to the state, then you may have a case. But saying Cornyn is going off half cocked because he is not considering the federalist question doesn't seem right to me.

Yetanotherjohn: If you don't see the federalism problem with conditional spending, you're not much of a federalist.

Gerry: "I just don't think it is a proper role for the court to be charged with making these case by case determinations. Let the legislatures determine what the parameters for an allowable use to be." Is that generally the position you take re courts and legislatures? It seems to me legislatures focus on one thing and make crude solutions that create new problems. A court looking at particular cases is able to see how things work in real life and be reasonable. I fear that this overreaction to Kelo is going to produce bad legislation.

John: You write: "The federal government even paying for these things in the first place was already a betrayal of federalism concerns. I find it difficult to get overly concerned by something that reduces the use of them." This is missing something hugely important. Spending with conditions lends itself to abuses whereby national majorities use tax money to manipulate local majorities into doing things they would otherwise, as a matter of constitutional federalism, be able to do according to the preference of local majorities. And the national majorities still get the money and only have to do what they would have wanted to do anyway. There is very strong scholarship demonstrating this dynamic.

Actually, I think that in general it is. I am not a stickler for 100% consistency, so there are probably examples of positions I have taken in particular instances that contradict it, but I am pretty sure that in the overwhelming majority of instances my personal opinions are square with it.

"I fear that this overreaction to Kelo is going to produce bad legislation."

In 'my world' (you know, the one where I get to be God), this would probably occur. The feds could do what they will (and as I mentioned above, I don't have a problem with Cornyn's bill-- I support it) and the states can make their own (and, actually, already have. Some states already do have legislation enacted limiting this authority).

Some of that legislation will be bad. Some will be good. The way things play out over time helps clarify for all which legislation was bad and which was good, so that more states and localities can craft their laws accordingly. And perhaps there is not a one-size-fits-all solution. Maybe what is best in a New England state, which is rather pressed for real estate, is different than what works for Arizona.

Yetanotherjohn: Here's my problem with your hypo --other than your weird concept of where I'd like to eat dinner! -- where did the federal government get this money it's spending? It got it from the people of the states. It's raked the money out and is handing it back with conditions. So it's not like you treating me to dinner. It's as if I took up a collection among a group of 10 friends to pay for dinner, then 6 of us decided we wanted to go to a place that was totally offensive to the other 4, and the 6 of us kept the money and said it was tough luck for the 4. Either go where we want or shut up about your money.

It's not just average citizens reading about Kelo and gnashing their teeth. Complaints are wide and come on both sides of the aisle.

Frankly, the wording of the ruling may matter to a judge far down the line, but the net effect at the city level, where most of us live, is obvious (only visible when one's attorney hat is doffed). Developers see a green light to grab anything they want.

Will these takings be upheld to state and federal levels? Who knows? But the rules have clearly changed, and property-owners should rightly fear that the city will attempt to do whatever it damn well pleases, if it can sufficiently please the court with their economic argument.

Whether these actions will ultimately be upheld is unclear, but the uncertainty is itself deletirious. Imagine Grandpa trying to guess whether to hold out when SCOTUS sends such a vague signal. Might as well toss a coin.

I really wouldn't be surprised to see violence result at the local City Council meetings. Many people still consider their property rights to be inalienable, except for extreme circumstances. A local riverwalk simply isn't one of them.

Ok, just for giggles.Ann and Dax own a 150 room downtown hotel that is 2 years old.We paid market price ($3.75 mil) for the land and the construction costs have remained constant. Our room rates are $190.00 a night. At 80% occupancy our NOI gives us an 8% return. Which is acceptable.Next door, a new hotel is going to be developed via the Kelo method.Construction costs are the same however; land costs are 65% less, legal fees are 60% less, there are zero brokerage fees, and substantial monies were saved due to expedited governmental approvals.Ann, how are we going to compete?Also, please keep in mind that our (Ann & Dax Hotel)taxes are being used to assist our competitor.

Gerry: Some of my willingness to answer depends on my mood. Especially complicated hypos that are posed mainly to make an argument. In questions about govt power, it's always possible to say, but what if something extreme happened? And the argument all along from the anti-Kelos has been a demand for automatic protection from something bad that might happen (rather than having to fight an individual case). That's basically the point of the hypo, and that's something I've answered to the point of repetitiveness. I get it that people don't like my answer, but you need to get it that another "what if something bad happens" isn't going to change my position.